MGMA Asks for HIPAA 5010 Contingency Plan

October 25, 2011

Research by the Medical Group Management Association (MGMA) on the transition to the new HIPAA Version 5010 electronic transaction standards indicates a need for the Department of Health and Human Services (HHS) to issue a comprehensive contingency plan permitting health plans to adjudicate claims that may not have all the required data content.

MGMA suggests that the coordination among many practices and their trading partners has not yet occurred. Practices that do not successfully implement Version 5010 by the Jan. 1, 2012, compliance date face possible disruption in cash flow.

“It is clear that a significant number of medical groups will not have the ability to transmit claims and other electronic transactions using the Version 5010 format by the Jan. 1 deadline,” said Susan Turney, MD, MS, FACP, FACMPE, MGMA president and CEO. “In particular, the study results highlight the fact that external testing with health plans is significantly delayed. It is imperative that HHS take immediate steps to ensure that practice operations are not compromised due to cash flow disruption.”

Key findings of the study:
Practice management system software vendors — Only about three-quarters (76.8 percent) of study respondents have heard from the practice management system software vendors regarding the transition to 5010, and only 35 percent of respondents indicate that internal testing has begun. Almost one quarter (21.7 percent) of respondents reported that internal testing with their practice management system vendor has not yet been scheduled.

Health plans — Just 5.7 percent of respondents indicate that all their major health plans have contacted them, and just 35 percent of respondents report that some of their major health plans have contacted them. Only 15 percent of those surveyed reported that external testing has started with all of their major health plans, and 15.3 percent reported that testing had started with some of their major health plans. Twenty-seven percent reported that external testing has not yet been scheduled.

Contingency plans — Physician practices were asked about their contingency plans following the Jan. 1 compliance date. More than a third (33.3 percent) expected to establish a line of credit at a local financial institution; 35.6 percent were planning on setting aside cash reserves to sustain operations, and more than half (50.6 percent) reported that they planned to revert to paper claims in an attempt to avoid cash flow issues.

Current implementation status – Just 4.5 percent rate their 5010 implementation status as fully complete, 50 percent rate it as between 26 and 99 percent complete, and 40 percent of surveyed practices report their current implementation status as less than one-quarter complete.

“It is unacceptable to expect physician practices to take such drastic action, such as reverting to paper claims, to avoid serious cash flow issues resulting from this mandate,” Turney continued. “The shift in the industry to electronic transactions in recent years could amplify the problem. Many health plans have transitioned staff away from handling paper claims, and we are concerned that a sudden, large increase in volume could also result in delayed payments.”